ADF Group Inc (ADFJF) Q1 2026 Earnings Call Highlights: Navigating Tariff Challenges with ...
Revenue: $55.5 million for the three-month period ended April 30, 2025, compared to $107.4 million for the same period in 2024.
Gross Margin: $12.2 million, decreased by $19.1 million from the previous year; gross margin percentage decreased from 29.2% to 22%.
Net Income: $8.7 million or $0.30 per share, compared to $15.3 million or $0.47 per share in the previous year.
Selling and Administrative Expenses: $3.4 million, a decrease of $6.3 million from the previous year.
Cash and Cash Equivalents: $75.3 million, $15.3 million higher than the January 31, 2025, ending balance.
Working Capital: $108.6 million with a ratio of 2.45:1.
CapEx: $1.6 million for the quarter, with full-year CapEx expected to be under $8 million.
Order Backlog: $330.4 million as of April 30, 2025.
Share Repurchase: 699,000 subordinate voting shares repurchased for $5.1 million during the quarter; total NCIB program repurchase of 1.8 million shares for $14.1 million.
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Release Date: June 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
ADF Group Inc (ADFJF) reported a strong order backlog exceeding $300 million as of April 30, 2025, indicating potential future revenue growth.
The company closed the first quarter with a robust cash and cash equivalents position of $75.3 million, which is $15.3 million higher than the previous quarter.
Net income for the quarter was $8.7 million, benefiting from lower net financial expenses and a $2.9 million foreign exchange gain.
ADF Group Inc (ADFJF) successfully completed its NCIB program, repurchasing 1.8 million shares, which reflects confidence in the company's value.
The company anticipates an increase in revenues and profitability in the second half of the fiscal year ending January 31, 2026, based on current market conditions.
Revenues for the quarter decreased significantly to $55.5 million from $107.4 million in the same period last year, primarily due to US tariffs.
Gross margin decreased by $19.1 million, with margins dropping from 29.2% to 22% year-over-year, impacted by tariffs and increased steel prices.
The uncertainty surrounding US tariffs has caused delays in fabrication hours, particularly affecting the Terrebonne plant in Quebec.
The company faced a loss of certain business opportunities due to the imposition of tariffs, affecting its US client base.
Selling and administrative expenses decreased by $6.3 million, but this was mainly due to adjustments in market value of deferred share units and performance share units, not operational improvements.
Q: Can you clarify if the expected growth in the second half of the year implies year-over-year growth back to the $80 million plus level, or is it growth over the quarter reported today? A: Based on current knowledge, we expect revenues to return to levels seen last year, around $80 to $85 million, assuming current conditions remain unchanged. - Jean Paschini, CEO
Q: How are contract discussions going with clients regarding exemptions? Are you seeing more receptiveness, and should we expect new contracts soon? A: We anticipate new contracts in the coming months, though it's uncertain if they will be US contracts due to ongoing tariff uncertainties. Conversations with clients are positive, but the situation remains fluid. - Jean-Francois Boursier, CFO
Q: Are you seeing any momentum with Canadian clients, given that this quarter was almost entirely US-focused? A: Yes, there is significant momentum with Canadian clients, and we see substantial potential in this area. - Jean-Francois Boursier, CFO
Q: With the NCIB completed and a large cash balance, what are your plans for capital allocation? Are you considering paying down debt or any CapEx projects? A: We are exploring various CapEx projects and scenarios to utilize our cash effectively, focusing on projects within our shop. - Jean-Francois Boursier, CFO
Q: What are your expectations for the second half of the fiscal year in terms of revenue and profitability? A: We expect an increase in revenues and profitability for the second half of the fiscal year, supported by a strong order backlog exceeding $300 million. - Jean Paschini, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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